Wal-Mart report backs critics

LODI - Sacramento Street has long lagged behind in Lodi's downtown renewal efforts, its string of boarded-up and deteriorating storefronts a familiar eyesore.

Daniel Thigpen

LODI - Sacramento Street has long lagged behind in Lodi's downtown renewal efforts, its string of boarded-up and deteriorating storefronts a familiar eyesore.

If economic forecasters are right, planting a behemoth Wal-Mart Supercenter in Lodi could mean the street stays that way a lot longer.

It could mean fewer Heidi Johnsons: small business owners willing to take a chance on the underdeveloped corridor. A recent study analyzing the potential economic impacts of a 226,868-square-foot Supercenter in Lodi says the mega-retailer could stunt downtown's growth.

"I can see how a big box store could hurt the probability of opening up another retail-type store," on this street, said Johnson, who since May has run a salon at Sacramento and Pine streets, at the end of a block of mostly abandoned buildings.

The economic analysis, prepared by Emeryville-based firm Bay Area Economics, or BAE, is the latest attempt to answer the scrutiny facing Wal-Mart in nearly every community where it tries to set up shop.

In Lodi, the predictions are nuanced:

Mom-and-pops in downtown may not close, but fewer will open. Initially, sales at other retail centers will be hammered. At least one may close, leaving east side residents without one major shopping option.

One concern often expressed in debates surrounding Wal-Mart is whether small, independently owned businesses can withstand pressure from the discount chain.

BAE's study says they can, at least in Lodi's central business district.

That's because most of the businesses open downtown offer niche products, not the general, discount retail items found in big box stores.

Wal-Mart's real impact, the study concludes, will be on the growth of business downtown. Fewer retailers will likely invest the money to rehabilitate downtown blemishes, such as Sacramento Street, in the first few years of a Supercenter opening.

So downtown is still fragile, said Randy Hatch, Lodi's top city planner. City policymakers, then, may still ask Wal-Mart to pitch in as much as $1 million to keep Lodi's downtown healthy, Hatch said.

One of the defining characteristics of a Supercenter is its attached grocery store. Opponents to the Lodi project in 2005 predicted other local supermarkets would fold under the increased competition.

Sales at other grocery stores will take a hit, BAE's study predicts, but the forecast is less dire. If a Supercenter were to open in 2008, sales at other grocery stores could drop 16 percent in the first year, slightly rebounding in following years.

Factors contributing to the optimistic outlook are numerous. One existing store, Food 4 Less, already is performing well above industry benchmarks. Others, such as Safeway, cater to a more upscale market.

For other grocery stores, convenience is the factor; they are farther away from the Wal-Mart and less likely to lose customers, BAE concluded.

Existing, large-scale retail centers will take the biggest hit post-Supercenter, the study said.

Together, stores such as Target and Kmart could see their sales down by 46 percent in the first year a Supercenter is open. Three years later, sales still would be down 38 percent, the study predicts.

Kmart, located off of Cherokee Lane in Lodi's underperforming East Side, is at a high risk of closing, because it competes more directly with Wal-Mart and is smaller.

The prediction disappointed Dorothy Young, one of a steady stream of shoppers heading in and out of Kmart one recent afternoon. Young, 68, shops there because it's closer to her home and, "I've just been a Kmart kid all my life."

Young lives in Galt. If Wal-Mart expanded in Lodi and Kmart did close, she wouldn't necessarily have to travel farther for discount items, though.